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Voice has always been a compelling way to activate certain human behaviors. It can stir women to distrust men based on voice pitch, it can soothe a crying baby, and now it’s being utilized to making shopping easier.

Well, that’s the hope.

Voice commerce is the new trend in online shopping that is piquing the interest of major players such as Google and Walmart. The two giants recently announced a one-month partnership to take on Amazon’s current dominance in the voice-shopping market.

Consumers in the US will be able to purchase any Walmart product through Google’s voice-activated assistant platform.

“For example, if you order Tide Pods or Gatorade, your Google Assistant will let you know which size and type you previously ordered from Walmart, making it easy for you to buy the right product again,” says Sridhar Ramaswamy, senior vice-president of ads & commerce at Google.

Walmart’s Head of Ecommerce Marc Lore shared that the retailer plans to expand the use of voice-activated shopping across its 4,700 stores to “create customer experiences that don’t currently exist within voice shopping anywhere else”.

To understand what currently exists and whether investing in voice-commerce makes sense, one must look to ecommerce giant Amazon and its strategy surrounding AI assistant Alexa.

Leading voice commerce, Amazon, of course

This year’s Prime Day, Amazon’s largest shopping event for its Prime members, happened on July 10 and theEcho Dotwas the best-selling product across any category globally, with customers purchasing seven times more of these devices this year than in 2016.

What are owners using Alexa to do?

Alexa Amazon Commerce

Alexa is typically being used to play music and set alarms/timers. Source: LivePerson

Amazon used Prime Day as a vehicle to increase its foothold in voice and offered premiums to influence a wave of shoppers to purchase these cylinder-shaped units. They included:

  • Voice shoppers had early access to select Prime Day deals a full two hours before the general public beginning
  • More than 100 Alexa exclusive deals were already available
  • First-time voice-shopping customers who purchased with Alexa before Prime Day received a $10 promo code
  • Amazon device owners could sign up for Prime via voice command. New members who signed up for Prime by voice got their first year of membership for $79, a $20 saving

LivePerson, a cloud-based software platform, surveyed over 500 Alexa owners in the US and discovered the following:

  • A significant majority (70.6%) of respondents have made a purchase on Amazon through an Alexa voice command at least once
Alexa Amazon Commerce

Electronics are the most popular category purchased through Alexa. Source: LivePerson

  • 45.8% of Alexa owners are repeat shoppers (meaning that, of consumers who give Alexa shopping a try once, almost two thirds turn into repeat users)
  • 70.6% of Alexa owners have an Amazon Prime account

By 2020, it’s projected that Amazon will sell 41.3 million of Echo units (each one retails for about $44.99). Having a physical presence in the household of many Americans gives Amazon a new channel of power.

Professor Scott Galloway of L2 placed an order for batteries on Alexa and discovered that the assistant would only recommend Amazon label products. Without the visual cue of product discovery, Alexa can strongly influence consumer buying decisions.

The voice trend has become so irresistible that even General Electric plans to soon sell a LED lamp with Alexa built in so consumers without an Echo can ask questions for information. Some food for thought.

One of the biggest pain points that most brand managers in traditional companies experience is internal push back when trying to drive their ecommerce initiatives forward.

Why is this?

Headlines like this:

Online sales eating into offline retailers profits
Ecommerce is killing traditional retail
Five signs that stores (not ecommerce) are the future of retail
The advantages of ecommerce over traditional retail

And this,

Ecommerce Case

A fashion item sold in store or online is still a sale made for the company. Source: ONESTOP

Creating an online retail channel requires resources and that could cause other departments to feel threatened but headlines like these create a ‘this or that’ type of mentality even within companies.

No matter which channel the sale is made, it’s all money going into the company’s pocket.

Given that online retail is usually pitted against traditional retail as “the enemy”, ecommerce managers have the uphill challenge of proving that this isn’t the case and actually, sometimes the complete opposite.

Re-thinking a traditional mindset

Fighting for more resources to be allocated to ecommerce becomes a struggle given the unpredictable nature of success online.

Open an offline store in a popular shopping center and it’s almost guaranteed to generate sales. Open an online store and fear that it will be lost in a sea of better keywords, better product images and even hungrier digital agencies.

But ecommerce is not new competition, it is simply another shop down the street that showcases what your brand is about. It can also be used to drive more foot traffic to your shop if conducted correctly.

Once the mindset, “you against me” is reversed, can ecommerce channels thrive on behalf of the brand.

The company will slowly learn a new business model described as “unified commerce” – where retail and the internet are not siloed but managed to complement one another.

Being able to utilize the internet to resurrect a brick-and-mortar brand will be vital to many brands currently stuck in an in-between situation.

Payless Shoesource in the United States is planning to close up to 500 of its stores for bankruptcy reorganization but will continue its operations in the Philippines – a market that they advocated for ecommerce almost since its inception in the country.

“It will be business as usual for Payless’ international operations, including the Philippines, as these business segments have been doing well and are profitable,” SSI Group Inc. said, Payless Philippines official distributor.

Making the ecommerce business case

Payless Philippines Ecommerce Project Manager, Thea Lizardo, spoke to a select audience at the ecommerceIQ x Google Ecommerce Masterclass in Manila earlier this year to share a few tips for managers advocating ecommerce internally.

Have a champion

This can be any individual in the company, preferably someone in the C-level ranks, who supports your mission to build a digital channel. When requesting for a larger budget or during monthly reporting, this ‘champion’ should be able to ensure enough resources are available to reach your growth targets.

ecommerceIQFrom experience, Thea knows that reporting may look deceiving to outlookers but that ecommerce managers should be able to understand and explain the numbers.

Brand milestones – highs – are usually followed by dips as the company reassess and allocates more spending to build the ‘front-end’ business (demand generation) by focusing on optimizing marketing, mobile, and product assortment, etc.

Employee advocacy

Often overlooked, a company’s employees can be the number one source for low-hanging free advertising fruit. As shared by Thea, 1,000 employees can be responsible for reaching one million customers, or creating 5,000 unique pieces of content all about your brand.

Their involvement in the company’s success online and knowledge of the ecommerce department’s progress will also build a sense of community and ownership.

ecommerceIQ Payless

Payless Philippines Ecommerce Project Manager, Thea Lizardo speaking at ecommerceIQ x Google PH Masterclass 2017

Here’s what you should know today:

1. Google Indonesia: 81 million out of 100 million internet users in Indonesia shop online

Google Indonesia revealed the number of people in the country who shop through online marketplaces has reached about 81 million.

The numbers are quite high, especially compared to Indonesia’s internet population of 100 million users. The country’s population is some 250 million people.

The market will continues to grow as mobile devices play more important role in the way of Indonesian shop in the future.

Read the full story here.

2. Ecommerce is one of the top five activities for Thai mobile users 

Latest survey by the Electronic Transactions Development Agency (ETDA) found ecommerce has replaced e-learning as one of the top five most popular activities in Thailand.

This is the first time ecommerce cracked to the top five. For years, the five most popular activities on mobile devices were communications, entertainment, gaming, online news and information searches, and e-learning.

60% of ecommerce transactions in the country are made on the mobile platform.

Read the full story here.

3. Uber is lining up investors including Softbank and Didi Chuxing

Uber is in exclusive talks for an estimated $12 billion funding round from four investors including Softbank and Didi Chuxing.

US equity firms Dragoneer Investment Group and General Atlantic are said to be the other two investors. Tencent is reportedly also exploring the opportunity to contribute.

The deal, if happened, would allow the company to retain its valuation of about $70 billion on paper.

Read the full story here.

THE BACKGROUND

Chinese brand Huawei started as a producer of phone switches in 1987 before becoming the Information and Communications Technology (ICT) giant it is today.

The company builds products along the entire wireless communications chain: chipsets, network connectors, and handsets.

As Fortune puts it, “it’s as if General Motors had paved the Interstate Highway System, then started selling cars.”

Huawei recorded more than $42 billion in revenue for the first half of 2017 across its three main business units: Carrier, Enterprise, and Consumer Business.

Under its Consumer Business division, Huawei entered the smartphone market in 2010 and quickly rose to No. 1 in homeland China until Oppo took the title in 2016.

Nonetheless, the brand shipped 139 million smartphones in 2016 and controls 9.8% of global smartphone market share and around the world, the brand trails only behind Samsung and Apple as the No. 3 mobile phone vendor.

huawei premium strategy

Global market share by phone vendor, 2016. Source: IDC

THE CHALLENGE

Huawei’s rise to the top three was achieved in a very short time — less than five years – but the brand is struggling to catch up to its biggest rivals, especially in overseas markets.

Despite being a household name in China, the brand isn’t well known in Europe and the US.

A few issues have plagued the brand’s reputation: a general consensus that Chinese companies produce ‘cheap and copycat products, allegations of national cybersecurity breaching, and a investigation from the US government.

These issues have hampered the brand’s efforts to gain footing in the world’s biggest premium consumer market — the United States.

Huawei’s US sales totaled $1.3 billion last year, only a fraction of its worldwide sales of $32.4 billion.

In addition, the company has also faced difficulties winning emerging markets like India and Indonesia as most consumers favored devices below Huawei’s price tag where its budget phone handsets start from $170.

The company does not have the equivalent of Apple’s die hard fans nor Samsung’s superior phone features – they have “better value for money” as its differentiator.  

Without a customer niche, Huawei will find it difficult to boost sales and stay competitive. Although revenue growth was impressive in the first half of this year, it was the company’s slowest in four years.  

THE INNOVATION

In October 2014, Huawei launched a new brand of mobile phones that they called Honor and was sold direct to consumer through online channels to keep prices in the mid-range and targeted digital natives – young hipsters.

Huawei premium strategy

Huawei’s Honor flagship store in Germany

Launching a sub-brand is also a part the company’s efforts to emphasize the brand’s focus on quality.

The company also spent a large portion of its marketing budget on overseas promotion, including plastering major cities in Europe with advertisements.

Huawei premium strategy

Billboard of Huawei phone in Poland. Credit: Wade Shepard

To further familiarize Europeans with its brand, Huawei drew on the popularity of major sports clubs like Arsenal and AC Milan and reached the masses with several sponsorships.

Huawei premium strategy

The brand became the official sponsor of English football Arsenal to raise its brand awareness.

In 2016, Huawei struck a partnership with German-company Leica to develop a dual-lens camera system that resulted in the Huawei P9 smartphone, touting an innovative camera as one of its selling points. Apple rolled out the same feature shortly after.

Andreas Kaufman, Chairman of the Supervisory Board of Leica Camera, saw the potential to become the second leg of digital revolution in the photography space where smartphones were the new amateur camera.

Huawei was also chosen by Google to build its flagship Android device Nexus in 2015. The partnership is strategically important for both companies as they are leveraging one another’s credentials for a leg up in an oligopoly market.

To crack the US market and simultaneously beat Apple for market share, Huawei is collaborating with Amazon and Google in the launch of its updated premium flagship device, the Mate.

The device is the first of Huawei’s smartphone to come with voice-interactive app, Amazon Alexa, and is available for purchase in US through Amazon. The Mate 9 is also the first Google Daydream-ready device for users to explore immersive virtual reality (VR) content and experience.

With so many enticing features jam-packed into one device, the soon-to-be launch Huawei Mate 10 is expected to surpass the performance of Apple’s highly anticipated iPhone 8.

THE STRATEGY

A few years ago, Red Zhengfei, founder of Huawei, laid out the company’s strategy: Huawei must make progress in the mid and high-end range with high quality products and turn a profit.

In order to do this, the Chinese company has continued to sacrifice margins to spend on R&D, investing $11 billion (76.4 billion yuan) to further its business.

Huawei further announced that it will focus on the mid-high segment for higher profits.

“We are giving up the very low-end devices because of the margin in this is extremely low, and it’s not making enough profit for us,” said Richard Yu, CEO of Huawei Consumer Business Group.

Huawei premium strategy

CEO of Huawei’s Consumer Business Group, Richard Yu

“The priority is Europe, China, and Japan, where the economy is healthy and people are able to consume them.”

THE FUTURE

The company continues to works towards becoming the No. 1 smartphone supplier in the world within four or five years and seizing  20%-25% global market share by introducing visionary innovation to its products in order to charge a premium.

“In the past for the smartphone you could see Apple leading innovation,” said Richard Yu. “But in the future, you will see innovation led not by them but by Huawei.”

Here’s what you should know:

1. Amazon is expanding to South Korea

It is reported that Amazon has hired dozens of full-time employees, including marketing, sales, technical support and service support related to online shopping business in Korea.

The company had also a discussion with one of Korean financial companies in relation to electronic payment settlement. It is presumed that Amazon’s Korean branch is preparing to engage ecommerce business in Korea.

A speculation about Amazon expansion in Korean market has been heard over the past four to five years.

With Amazon entering Southeast Asia from Singapore, Korea is now the only remaining market in Asia with India. Amazon is already showing a rapid growth in Japan and failed to land in China.

Read the full story here

2. Google’s Go Global initiative aims to train 2,500 SMEs 

Google announced the expansion of its Go Global initiative, launched in 2015, with a commitment to train 2,500 small and medium enterprises (SMEs) to be digitally and export-ready by 2019.

The scheme will now includes access to dedicated marketing consultants for advice on growing businesses through online media besides developing ecommerce capabilities.

Google’s new partnerships with the National Trades Union Congress (NTUC) and Singapore infocomm Technology Federation (SiTF) will also help to reach a larger pool of SMEs. Go Global’s offerings will now be available to NTUC’s and SiTF’s combined base of 13,650 member companies.

Read the full story here

3. Shiseido is launching Nars in China through online

Japanese company Shiseido will release its high-end cosmetics brand Nars in China to attract new customers as the country’s income levels rise.

Shiseido will begin online sales through WeShop, a popular Chinese ecommerce site, at the end of August and offer its selections of  foundation, lipstick, eyeliner. Shiseido predicts Chinese sales will improve 14% on a local currency basis.

Nars became a Shiseido subsidiary in 2000. The brand mainly sells in department stores throughout around 30 countries in the Americas, Europe, Japan and Southeast Asia. Nars is also sold in Hong Kong, but not in Mainland China.

Read the full story here

Here’s what you should know today.

1. Google is slapped with $2.7 billion antitrust fine by EU 

The European Commission – the European Union’s top administrative body and antitrust regulator – has fined Google US$2.73 billion for anti-competitive business practices.

The Commission found that the US company’s web search function gave undue prominence to its own price comparison service in search results.

The Commission has demanded that Google end this conduct within 90 days, or face additional penalty payments of up to 5 percent of the average daily global turnover of its parent company Alphabet.

Read the rest of the story here.

 

2. Indonesian ecommerce site Alfacart drops third-party sellers

Alfacart, the ecommerce endeavor of major Indonesian mini market and convenience store chain Alfamart, is changing its business model. As a result, Alfacart’s entire C-level management will resign.

What’s certain is that Alfacart will no longer operate as a marketplace after the change. It will only sell products already available in Alfamart’s own product assortment. That’s mainly groceries and everyday household items.

Mini markets work well in Indonesia. Growth of such retail locations is outpacing that of larger stores, according to rating agency Fitch.

Indonesia Stock Exchange-listed Alfamart operates more than 12,000 stores (link in Indonesian) across Indonesia and the Philippines.

Read the rest of the story here.

 

3. Online accounted for over 17% of China’s total retail sales Jan-May 2017

China’s total retail sales of consumer goods reached 2,945.9 $430.8 billion in May, up by 10.7% YoY. Online retail accounted for over 17% of total retail sales from January to May.

The retail sales of consumer goods in China’s urban areas was 2,536.0 billion yuan in May 2017, up by 10.4% YoY while that in rural areas was 409.9 billion yuan, up by 12.7% YoY.

 Of the online retail sales of physical goods, food, clothing and other commodities went up by 21.5%, 20.6%, and 29.2% respectively.

This puts China’s ecommerce market and potential at a much more developed landscape than other Asian countries, namely Southeast Asia’s developing markets. Brands in China have potential to capture a nationwide audience of both urban and rural shoppers who are discovering brands on WeChat and Tmall, whilst also being very receptive to online payment platforms.It seems that ecommerce in China can only get bigger in size and value.

Read the rest of the story here.